The Open Operational Research Journal

2008, 2 : 60-67
Published online 2008 October 07. DOI: 10.2174/1874243200802010060
Publisher ID: TOORJ-2-60

The Sensitivity Analysis of the International Investment Decision Model

Tsui-Yii Shih and Charles V. Trappey
Department of Business Administration, LungHwa University of Science and Technology, 300, Sec. 1, WanShou Rd., GuiShan Shiang, Taoyuan County 333, Taiwan.

ABSTRACT

Johanson and Vahlne’s research provides a starting point for building a model that suits general international investments and decision making processes. This research derives an integer programming investment decision model that also considers investment costs and the risk attitudes of firms. The sensitivity analysis of the revised model demonstrates how risk attitudes and investment costs influence the optimal investment decision. Compared to the cost factors, the influence of attitudes toward risk are the key to the overall decision making process.

Keywords:

Integer programming, sensitivity analysis, internationalization process model.